Both of them have said plenty. Ken Lay defiantly said at a press conference, "I take full responsibility for what happened at Enron. But saying that, I know in my mind that I did nothing criminal."
He conveyed he wasn't responsible for the actions of CFO Andrew Fastow and others. His lawyer said that they were "Comfortable that Ken did nothing inappropriate or criminal."
Martha Stewart said that what she made selling her ImClone stock "amounted to approximately $40,000, about .0006 of my net worth."
Lay's defense is that he was not involved in what the company was actually doing, even when he returned as CEO after former CEO Jeff Skilling's abrupt departure just before Enron's world collapsed. After her conviction, Martha Stewart only said she would appeal the conviction.
Both Lay and Stewart had the highest priced lawyers, but what they needed was better thinkers and writers. Let's turn back the clock, and imagine if they said something different, something truthful -- something which indicated they really understood the situation.
Ken Lay, for starters, should have said, "I should have listened to Sherron Watkins." Next he should have said, "It was a mistake to assign the internal investigation to our long-term law firm. I should have realized that they have an inherent conflict of interest." But most important, he should have said, not the wishy-washy, unbelievable, "I accept responsibility but I wasn't responsible," but "I accept responsibility, because as CEO, I should have known, and it was my job to ask tougher questions and make sure I got outside, objective analysis."
I believe him when he says he didn't know fully what Fastow was up to, but it certainly seems as if he didn't know because he didn't want to know. True, there are plenty of things that CEOs don't know. But it's their job to make sure systems are in place to catch discrepancies.
One of the most damaging allegations against Lay was the millions and millions of Enron stock that he sold, allegedly to cover margin calls, but instead of selling on the open market, he sold it back to Enron, so no one knew. His defense is apparently that it was not illegal. Maybe not, but it was sure stupid and misleading. He should have said, "Maybe it was technically legal but it was stupid and harmful to do it privately."
What would have happened to Martha Stewart if, right at the beginning, she had said, "I made a bad decision. Since I've been a stock broker, I should have known it was the wrong thing to do."
Even if she's telling the truth that she didn't have an overt tip-off, and even if she had the undocumented stop-order to sell at a certain stock price as she claims, what if she had said, "I'm smart and experienced, and I should have known what the perception would have been." That would have rung true.
Further, as the queen of perception and image of high quality, she could have continued, "I above everyone else understand the importance of the reality of quality as well as the perception of quality, and of not taking short cuts. I made a terrible mistake. And I'm sorry."
I'm sorry. Neither Lay nor Stewart has said or conveyed regret. The only thing either one of them is truly sorry for is getting caught.
In other words, charitably -- but not probably -- there may be some truth in their story. The problem is that by not admitting that they should have known better, they undercut whatever crumb of truth may be there. By not genuinely apologizing for miserably failing in their fiduciary responsibilities, they infuriate their shareholders. By not admitting that they fell short in the very areas where they were experts, they undercut their legal arguments.
In Lay's case, it was his ability to envision the future and spot trends. In Stewart's case, it was her ability to create an image of high quality.
My daughter is reading "Silent to the Bone", by the wonderful writer, E.L. Konigsburg, where a boy is struck dumb after the family's au pair abuses his infant baby sister. He had known about the au pair's behavior for months and said nothing. His best friend, who is trying to help him, observes, "I've discovered that silence can be a lie."
If these things had not been left unsaid, Ken Lay and Martha Stewart would have saved more than millions of dollars in legal fees, and both would have saved their reputations.
Merrie Spaeth, is the president of a Dallas-based consulting firm and is a regular commentator and writer on communication issues.
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